Catalent to acquire Paragon and plans “substantial capital investments” to ensure Paragon’s further growth, the latest deal in a busy area.

The two companies have entered a $1.2bn (€1.02bn) all-cash merger agreement under which Catalent will purchase all of Paragon Bioservices’s equity

Catalent, a contract development and manufacturing organisation (CDMO), signed the deal as it looks to boost its adeno-associated viral (AAV) vectors, lentivirus vectors, and plasmid development and manufacturing capabilities.

In a statement, Catalent pointed to the potential for the gene therapy market to become worth $40bn and revealed that Paragon is currently projected to bring in more than $200m in revenue in full-year results in 2019.

However, a spokesperson for Catalent told us that is looking to invest heavily once the acquisition completes: “The next stage of Paragon’s growth will require substantial capital investments. Catalent is committed to making the necessary investments and has the expertise to assure smooth execution.”​

One immediate investment that will be made will see the addition of 125 staff members to the Paragon’s existing team of 380.

The deal is expected to close in the second quarter of this year.

Sign of the times​

Catalent’s investment in the gene therapy market comes at a time when there are a growing number of gene therapy​ treatments in the pipeline, and an associated increased demand for AAV vectors.

The spokesperson for Catalent confirmed what those working in the biotech industry have already spoken of​ – increased demand is outstripping supply of vectors, which makes now an “ideal time for Catalent to enter the space.”​